SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

                   Quarterly Report Under Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

For Quarter Ended:                                   Commission File Number:
March 31, 1997                                              0 - 19957

                                  Quantech Ltd.
             (Exact name of registrant as specified in its charter)

       Minnesota                                        41-1709417
(State or other jurisdiction                          (I.R.S. Employer
 of incorporation or organization)                    identification No.)

                             1419 Energy Park Drive
                               St. Paul, MN 55108
 (Address of principal executive offices)         (Zip code)

                                 (612)-647-6370
              (Registrant's telephone number, including area code)

                                       N/A
              (Former name, former address and former fiscal year,
                          if changed since last report)

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

              YES     X        NO ____

     Indicate the number of shares  outstanding of each of the issuer's  classes
of common stock as of the latest  practicable date:  47,675,759 shares of Common
Stock, par value $.01 per share, outstanding as of May 10 , 1997.

     Transitional Small Business Disclosure Format: YES ___ NO X


<PAGE>


                                      Index

PART I.    FINANCIAL INFORMATION                               Page No.

     Item 1: Financial Statements:                               3

     Balance Sheets as of March 31, 1997 and June 30, 1996

     Statement of  Operations  for the Three  Months and Nine 
     Months Ended March 31, 1997 and 1996 and from inception to
     March 31, 1997                                              4

     Statement of Stockholders' Equity from inception to
     March 31, 1997                                              6

     Statement of Cash Flows for the Nine Months ended 
     March 31, 1997 and 1996 and from inception to 
     March 31, 1997                                              7

     Notes to Financial Statements                               8

     Item 2:      Management's Discussion and Analysis or
                      Plan of Operation                          9

PART II.    OTHER INFORMATION                                   13




<PAGE>



PART I
                                  QUANTECH LTD.
                          (A Development Stage Company)
                                  BALANCE SHEET


<TABLE>
<CAPTION>
                                                                             (Unaudited)
                                                                              March 31,             June 30,
                                                                                1997                 1996
                                                                       ------------------   ------------------
<S>                                                                    <C>                  <C>    
ASSETS

CURRENT ASSETS
  Cash and cash equivalents                                             $           457,670 $          2,942,871
  Other current assets                                                               53,633               41,269
                                                                          ------------------   ------------------
                                                                                    511,303            2,984,140
                                                                          ------------------   ------------------
EQUIPMENT
  Equipment                                                                         360,007              268,058
  Leasehold Improvements                                                             15,000               15,000
                                                                          ------------------   ------------------
                                                                                    375,007              283,058
   Less:accumulated depreciation                                                   (123,680)             (78,657)
                                                                          ------------------   ------------------
                                                                                    251,327              204,401
                                                                          ------------------   ------------------
OTHER ASSETS
  License agreement, at cost, less amortization                                   2,152,502            2,320,334
  Organization expenses, at cost, less amortization                                     150                4,675
                                                                          ------------------   ------------------
                                                                                  2,152,652            2,325,009
                                                                          ------------------   ------------------
TOTAL  ASSETS                                                           $         2,915,282 $          5,513,550
                                                                          ==================   ==================
LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)

CURRENT LIABILITIES
  Short term debt                                                       $                 0 $             24,455
  Accounts Payable                                                                  264,641              114,934
  Accrued Expenses:
    Spectrum Diagnostics Inc. obligations                                            40,868               53,637
    Minimum Royalty Commitment                                                       93,750                    0
    Other                                                                             7,402                    0
                                                                          ------------------   ------------------
   Total Current Liabilites                                                         406,661              193,026
                                                                          ------------------   ------------------

LONG-TERM OBLIGATIONS
    Minimum Royalty Commitment                                                            0               37,500
                                                                          ------------------   ------------------

STOCKHOLDERS EQUITY (DEFICIT)
  Common stock, $.01 par value; authorized 90,000,000
   shares; issued and outstanding 47,675,759 shares at
   March 31, 1997; and 46,900,759 at June 30, 1996                      $           476,758 $            469,008
  Additional paid-in capital                                                     15,475,796           15,296,856
  Deficit accumulated during the development stage                              (13,443,933)         (10,482,840)
                                                                          ------------------   ------------------
  Total Stockholders Equity                                                       2,508,621            5,283,024
                                                                          ------------------   ------------------
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                               $         2,915,282 $          5,513,550
                                                                          ==================   ==================

</TABLE>


<PAGE>



                                  QUANTECH LTD.
                          (A Development Stage Company)
                        STATEMENT OF OPERATIONS-UNAUDITED



<TABLE>
<CAPTION>
                                                    Three months           Three months
                                                         Ended                  Ended
                                                       March 31,              March 31,
                                                         1997                   1996
                                                  --------------------   --------------------
<S>                                               <C>                    <C>                                       
Interest Income                                      $         14,655       $         10,983
                                                  --------------------   --------------------

Expenses:
  General & Administrative                                    423,016                270,769
  Research and development                                    584,946                238,294
  Sales and Marketing                                         108,354                      -
  Minimum royalty expense                                      18,750                 18,750
  Loses resulting from transactions
   with Spectrum Diagnostics Inc.                                   -                      -
  Net exchange (gain)                                               -                      -
  Financing                                                     1,471                  3,501
                                                  --------------------   --------------------
                                                            1,136,537                531,314
                                                  --------------------   --------------------
Loss before income taxes                                   (1,121,882)              (520,331)
Income taxes                                                        -                      -
                                                  ====================   ====================
Net loss                                               $   (1,121,882)       $      (520,331)
                                                  ====================   ====================

Loss per common share                                 $         (0.02)       $         (0.01)
Weighted average common shares
  outstanding                                              47,488,759             40,659,893


</TABLE>


<PAGE>




                                  QUANTECH LTD.
                          (A Development Stage Company)
                  STATEMENT OF OPERATIONS-UNAUDITED (CONTINUED)

     
<TABLE>
<CAPTION>
                                                                                                     Period From
                                                                                                     September 30,
                                                                                                         1991
                                                      Nine Months            Nine Months               (Date 0f
                                                         Ended                  Ended               Inception), to
                                                       March 31,              March 31,                March 31,
                                                         1997                    1996                    1997
                                                  --------------------   ---------------------    --------------------
<S>                                               <C>                    <C>                      <C>                            
Interest Income                                      $         75,887      $           23,310         $       165,814
                                                  --------------------   ---------------------    --------------------

Expenses:
  General & Administrative                                  1,147,680                 919,506               7,289,151
  Research and development                                  1,648,359                 691,585               4,179,478
  Sales and Marketing                                         178,778                       -                 178,778
  Minimum royalty expense                                      56,250                 106,250                 943,750
  Loses resulting from transactions
   with Spectrum Diagnostics Inc.                                   -                       -                 556,150
  Net exchange (gain)                                               -                       -                 (67,172)
  Financing                                                     5,913                 106,329                 487,017
                                                  --------------------   ---------------------    --------------------
                                                            3,036,980               1,823,670              13,567,152
                                                  --------------------   ---------------------    --------------------
Loss before income taxes                                   (2,961,093)             (1,800,360)            (13,401,338)
Income taxes                                                        -                       -                  42,595
                                                  ====================   =====================    ====================
Net loss                                               $   (2,961,093)        $    (1,800,360)          $ (13,443,933)
                                                  ====================   =====================    ====================

Loss per common share                                 $        (0.06)    $             (0.07)
Weighted average common shares
  outstanding                                              47,167,584              25,793,027

</TABLE>


<PAGE>
                                  QUANTECH LTD
                          (A Development Stage Company)

                   STATEMENT OF STOCKHOLDERS'EQUITY-UNAUDITED
      Period From September 30, 1991 (date of Inception), to March 31, 1997

<TABLE>
<CAPTION>


                                                                       Deficit
                                                                     Accumulated
                                                                       During
                                               Par     Additional        the                    Paid for     Due     Cumulative
                                   Shares     Value      Paid-In      Development Subscriptions    Not       From    Translation
                                   Issued    Amount      Capital         Stage    Receivable     Issued    Officers  Adjustment
                                  ------------------------------------------------------------------------------------------
<S>                               <C>       <C>         <C>           <C>         <C>            <C>       <C>       <C>

Balance at Inception
Net Loss for 15 months                                                 ($3,475,608)
Common stock transactions:
 Common stock issued,
  October 1991                    3,200,000 $3,154,574
 Common stock issued,
  November 1991                     600,000  $611,746   $1,788,254
 Common stock issuance costs                             ($889,849)
 Cumulative translation adjustment                                                                                   $387,754
 Common stock issued,
  September 1992                    700,000  $699,033     $875,967                ($53,689)
 Common stock issuance costs                             ($312,755)
 Common stock to be issued                                                                        $120,000
 Cumulative translation adjustment                                                                                  ($209,099)
 Elimination of cumulative translation adjustment                                                                   ($178,655)
Officers advances, net                                                                                     ($27,433)
                                  ---------------------------------------------------------------------------------------------
Balance, December 31, 1992        4,500,000 $4,465,353   $1,461,617    ($3,475,608)($53,689)      $120,000 ($27,433)       $0

Net loss                                                                 ($996,089)
Common stock transactions:
 Common stock issued,
   January 1993                     160,000    $1,600      $118,400                               ($120,000)
 Common stock issued,
   April 1993                        30,000      $300       $11,700
 Change in common stock par
   value resulting from merger
 Change in common stock par
   value resulting from merger             ($4,420,353)  $4,420,353
Repayments                                                                                                    $5,137
                                  ----------------------------------------------------------------------------------------------
Balance,June 30, 1993             4,690,000   $46,900    $6,012,070    ($4,471,697)($53,689)            $0  ($22,296)       $0

Net loss                                                               ($1,543,888)
240,000 shares of common
 stock to be issued                                                                                $30,000
Repayments                                                                          $53,689                   $22,296
                                  ----------------------------------------------------------------------------------------------
Balance, June 30, 1994            4,690,000   $46,900 $6,012,070       ($6,015,585)      $0        $30,000         $0       $0

Net loss                                                               ($2,070,292)
Common stock issued, June 1995    2,150,000   $21,500   $276,068                   ($20,000)      ($30,000)
Warrants issued for services                             $40,200
                                  ----------------------------------------------------------------------------------------------
Balance June 30, 1995             6,840,000   $68,400 $6,328,338       ($8,085,877)($20,000)            $0         $0       $0
Common stock issued, net of
  issuance costs of $848,877:
     July, 1995                   6,160,000   $61,600  $1,304,450
     August, 1995                   717,600    $7,176    $161,460
     September, 1995             13,807,296  $138,073  $2,370,389
     November, 1995               1,897,840   $18,978    $425,482
     December, 1995              11,217,157  $112,172  $1,292,473
     May, 1996                    6,275,000   $62,750  $3,300,422
     June, 1996                       5,058       $51      $3,650
Payments received on
  subscription receivable           (19,192)    ($192)   ($14,808)                  $20,000
Compensation expense recorded
  on stock options                                       $125,000
Net loss                                                               ($2,396,963)
                                  -----------------------------------------------------------------------------------------------
Balance, June 30, 1996            46,900,759 $469,008  $15,296,85     ($10,482,840)       $0            $0         $0       $0
Stock offering costs                                   ($12,310)
Common stock issued upon exercise of
 options and warrants
     September 1996                  10,000      $100    $2,400
     October 1996                   170,000    $1,700   $40,800
     November 1996                   15,000      $150    $3,600
     December 1996                  270,000    $2,700   $64,800                      ($57,500)
     January 1997                    20,000      $200    $4,800
     February 1997                  150,000    $1,500   $17,250
     March 1997                     140,000    $1,400   $33,600
Payments received on                                                                  $57,500
  subscription receivable
Compensation expense recorded
  on stock options                                      $24,000
Net loss                                                               ($2,961,093)
                                  ----------------------------------------------------------------------------------------------
Balance, March 31, 1997
(Unaudited)                       47,675,759 $476,758 $15,475,796     ($13,443,933)       $0              $0         $0       $0
                                  ===============================================================================================


</TABLE>

<PAGE>

                                  QUANTECH LTD
                          (A Development Stage Company)
                      STATEMENTS OF CASH FLOWS - UNAUDITED


<TABLE>
<CAPTION>

                                                                                                           Period From
                                                                                                          September 30,
                                                                     Nine                  Nine                1991
                                                                    Months                Months             (Date of
                                                                    ended                 ended          Inception), to
                                                                  March 31,              March 31,          March 31,
                                                                     1997                  1996                1997
                                                               --------------------  ------------------  -----------------
<S>                                                             <C>                  <C>                  <C>    
Cash Flows From Operating Activities
 Net Loss                                                      $       (2,961,093)   $     (1,800,360)    $  (13,443,933)
 Adjustments to reconcile net loss to net cash used in
  operating activities:
  Elimination of cumulative translation adjustment                              -                   -           (178,655)
  Depreciation                                                             45,023              27,884            170,034
  Amortization                                                            172,357             179,195          1,300,636
  Noncash compensation and interest                                        24,000             125,000            513,250
  Losses resulting from transactions with
   Spectrum Diagnostics Inc.                                                    -                   -            556,150
  Write down of investment                                                      -                   -             67,500
  Change in assets and  liabilities,  net of effects  from  purchase of 
     Spectrum Diagnostics Inc.:
   (Increase) decrease in current assets                                  (12,364)             (1,039)            22,804
    Increase (decrease)in accounts payable                                149,707            (640,184)           263,086
    Increase (decrease) in accrued expenses                                50,883            (536,784)           416,144
                                                               --------------------  ------------------  -----------------
     Net cash used in operating activities                             (2,531,487)         (2,646,288)       (10,312,984)
                                                               --------------------  ------------------  -----------------

Cash Flows From Investing Activities
 Purchase of property and equipment                                       (91,949)           (156,789)          (414,390)
 Organization expenses                                                          -                   -            (97,547)
 Officer advances, net                                                          -                   -           (109,462)
 Purchase of investment                                                         -                   -           (225,000)
 Purchase of license agreement                                                  -                   -         (1,950,000)
 Advances to Spectrum Diagnostics, Inc.                                         -                   -           (320,297)
 Prepaid securities issuance costs                                              -                   -            (22,943)
 Purchase of Spectrum Diagnostics, Inc., net of cash
  and cash equivalents acquired                                                 -                   -         (1,204,500)
                                                               --------------------  ------------------  -----------------
   Net cash used in investing activities                                  (91,949)           (156,789)        (4,344,139)
                                                               --------------------  ------------------  -----------------

Cash Flows From Financing Activities
 Net proceeds from the sale of common stock                     $         112,500    $      3,312,952    $    12,720,736
 Proceeds on debt obligations                                                   -                   -          2,658,435
 Payments received on stock subscription receivables                       62,500                   -             67,500
 Stock offering costs                                                     (12,310)                  -            (12,310)
 Payments on debt obligations                                             (24,455)           (347,034)          (522,810)
                                                               --------------------  ------------------  -----------------
  Net cash provided by financing activities                               138,235           2,965,918         14,911,551
                                                               --------------------  ------------------  -----------------

Effect of Exchange Rate Changes on Cash                                         -                   -            203,242
                                                               --------------------  ------------------  -----------------
   Net increase (decrease) in cash                                     (2,485,201)            162,841            457,670
Cash
 Beginning                                                              2,942,871               4,276                  -
                                                               --------------------  ------------------  -----------------
 Ending                                                        $          457,670    $        167,117    $       457,670
                                                               ====================  ==================  =================

</TABLE>
<PAGE>
                                                         
                                  QUANTECH LTD.
                         ( A Development Stage Company )

                     NOTES TO UNAUDITED FINANCIAL STATEMENTS

Note 1. BASIS OF PRESENTATION
In the opinion of the  management  of the Company,  the  accompanying  unaudited
financial  statements  contain  all  adjustments  (consisting  of  only  normal,
recurring adjustments) necessary to present fairly the financial position of the
Company as of March 31,  1997 and the results of  operations and its cash flows
for the three month and nine month  periods  ended March 31, 1997 and 1996. The
results of operations for any interim period are not necessarily  indicative of
the results for the year. These interim  financial statements should be read in
conjunction with the Company's annual financial statements and related notes in
the Company's Annual Report on Form 10-KSB for the year ended June 30, 1996.

Note 2. LICENSE AGREEMENT
The Company has a license agreement for certain patents, proprietary information
and  associated hardware related to SPR  technology.  The license calls for an
ongoing royalty of 6 percent on all products utilizing the SPR technology which
are sold by the Company. In addition, if the Company sublicenses the technology,
the  Company  will pay a royalty of 15 percent of all revenues received by the
Company under any sublicense. If the cumulative payments of these two royalties
fail to reach at least $1,000,000 by December 31,  1997,  the licensor has the
right  to  deprive  the  Company  of its exclusive rights under the license
agreement.  As of  December  31,  1996,  the  Company  has paid $850,000 of the
cumulative  royalty  payments.  The Company has also ratably accrued additional
minimum  royalty  payments  of $93,750 as of March 31,  1997,  because sales or
sublicense revenues through December 31, 1997 may not be adequate to meet the
cumulative  minimum royalty  payments. The Company intends to accrue the entire
$150,000 by December 31, 1997.


<PAGE>



                  ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS
                              OR PLAN OF OPERATION

History

     Quantech Ltd.  ("Quantech"  or the  "Company") was formed under the laws of
Minnesota  for the  purpose of  effecting  the change of  domicile  of  Spectrum
Diagnostics  S.p.A.  ("SDS")  from Italy to the state of  Minnesota  through the
merger  with SDS on April 14,  1993.  Quantech  had no  operations  prior to the
merger and is continuing the business of SDS to  commercialize  Surface  Plasmon
Resonance ("SPR") technology licensed from Ares-Serono. SPR, the core technology
of  Quantech's  proposed  medical  diagnostic  system,  enables  the  Company to
integrate the existing diagnostic methodologies of immunoassays,  DNA probes and
chemical  binding into a single,  simple  economical  system in order to provide
rapid,  quantitative,  diagnostic  results.  The Quantech  system  configuration
consists  of a small  bench  top  instrument  and a series of  disposables  each
offering  a  particular  test or  series of tests.  It is  anticipated  that the
Quantech system will have the ability to analyze body fluids (e.g.  whole blood,
urine,  saliva)  without  preparation  or addition of  reagents.  The  Company's
initial  focus is to  develop  its SPR  instrument  for  Critical  Care Units of
hospitals,  the first such unit being the emergency  department.  Its first test
will aid physicians in assessing  whether a patient has suffered a heart attack,
with additional disposable tests being introduced after the initial introduction
of the Quantech system.

     Quantech is a  development  stage  company  which has suffered  losses from
operations and will require  additional  financing to commercialize its product.
The Company's product development must be completed,  FDA approval obtained, the
product  introduced  to the  market,  and  ultimately,  Quantech  will  need  to
successfully attain profitable operations. These factors raise substantial doubt
about the Company's ability to continue as a going concern.

Results of Operations

     The Company has incurred a net loss of $13,443,933  from September 30, 1991
(date of inception)  through March 31, 1997 due to expenses related to formation
and  operation  of SDS in Italy,  continuing  costs of raising  capital,  normal
expenses of operating over an extended period of time, funds applied to research
and development,  royalty payments related to the SPR technology,  losses due to
expenses of Quantech's  predecessor,  Spectrum Diagnostics Inc., and interest on
borrowed funds. In addition,  an investment of $3,356,629 was made when Quantech
purchased the exclusive rights to the SPR technology.

     For the  three and nine  months  ended  March 31,  1997,  the  Company  had
interest  income of $14,655 and $75,887,  respectively,  compared to $10,983 and
$23,310,  respectively,  for the same  periods  in 1996 as a result of a greater
amount of cash on hand  obtained  from  Quantech's  1996  private  placement  of
securities.  General and  administration  expenses  increased  to  $423,016  and
$1,147,680  for such three and nine months ended March 31,  1997,  respectively,
from  $270,769  and $919,506 for the three and nine months ended March 31, 1996,
respectively.  These  increases  were in part a result  of  adding  general  and
administration  personnel and other costs associated with Quantech continuing to
build its infrastructure in anticipation of commercial production of its system.
A significant  portion of the increase was also attributable to increased public
relations  expenditures and costs associated with pursuing  additional short and
long term  funding.  General and  administration  expenses  are  anticipated  to
increase in the future as the Company nears market  introduction  of, and begins
to sell, its system.
<PAGE>

     Research and development  costs increased from $238,294 and $691,585 in the
three and nine  months  ended March 31,  1996,  respectively,  to  $584,946  and
$1,648,359 in the same respective  periods of 1997. These increases are a result
of accelerated research and development activity,  including hiring of employees
and consultants,  purchasing of chemistry supplies and engaging firms to perform
contract development work, including design engineering on Quantech's disposable
and instrument.  It is expected that research and development  expenditures will
continue to increase as Quantech  completes  development  of its system,  begins
work on  additional  disposable  tests for its system and  maintains  a level of
activity to continually improve and advance the Company's technology and testing
system.

     The Company for the three  months ended March 31, 1997  incurred  sales and
marketing expenses of $108,354.  There are no comparative periods for such sales
and marketing  expenditures  as the Company  established its sales and marketing
activity in the quarter ended December 31, 1996. Sales and Marketing activity in
the three  month  period  ended  March 31, 1997  consisted  of market  research,
including attending the winter symposiums of Emergency  Physicians,  integrating
user requirements into the disposable and instrument designs and initiating work
on  Quantech's  marketing  plan.  The Company  anticipates  sales and  marketing
expenses to increase  substantially as it nears product  introduction and begins
system sales.

     Minimum royalty  expense  decreased in the nine months ended March 31, 1997
as  compared  to the same  1996  period  as a result  of the  declining  minimum
royalties owed under Quantech's license with Ares-Serono. Such expense was equal
in the comparable three month periods.

     For the three and nine months  ended March 31, 1997  Quantech had a loss of
$1,121,882 and $2,961,093, respectively, as compared to $520,331 and $1,800,360,
respectively,  for the same periods ended March 31, 1996.  These  increases were
the result of the rise in general and  administration,  research and development
and sales and  marketing  expenditures  exceeding  decreases  in such periods in
minimum royalty and financing expenses and the increase in interest income.

     The Company to date has  contracted for the  development  and design of its
prototype   instrument   and  disposable   and  their   manufacture,   finalized
specifications   for  the  grating   component  of  its  disposable,   completed
operational   prototypes  of  its   instrument  and  continued  to  develop  the
chemistries  necessary to do specific  tests.  Quantech is currently  completing
development  of its  chemistries  to  provide  its system  with the  sensitivity
required for market introduction.  Management  anticipates that the Company will
be able to submit its system to the FDA for  approval  in the summer of 1997 and
will  introduce  its product  into the United  States after  receiving  such FDA
approval. This timetable will be influenced by the Company's ability to complete
the final  development of its system and necessary testing for submission of its
FDA filing and delays it may encounter with the FDA in its review of the system.

Liquidity and Capital Resources

     From  inception  to March  31,  1997,  Quantech  has  raised  approximately
$15,500,000 through a combination of public stock sales, private stock sales and
debt  obligations.  Quantech  will not have  sufficient  funds to  continue  its
current  operations beyond May 31, 1997. To provide it with additional  funding,
the Company,  through its investment  banker,  is currently raising a minimum of
$1,000,000  and a maximum of $2,500,000  through the sale of notes (the "Notes")
and  warrants  (the  "Warrants").  The Notes will be due and  payable on June 1,
1998, or earlier upon Quantech  completing a transaction that provides it with a
minimum of $5,000,000  (the  "Additional  Funding").  Interest will be the prime
rate plus five percent and the Notes will be secured by all of the assets of the
Company.  For each  dollar  invested  in the Note the  investor  will  receive a
Warrant to purchase  two shares of Quantech  Common  Stock at an exercise  price
equal to 80% of the  price  of the  Additional  Funding  or,  if the  Additional
Funding has not occurred  prior to June 1, 1998,  the lower of 80% of the market
price of the Company's Common Stock for the 20 consecutive trading days prior to
the  issuance of the Warrant or June 1, 1998.  Terms are subject to  negotiation
and may change. The Company believes it will complete the sale of the minimum of
$1,000,000  of the Notes by May 31, 1997 and the maximum of  $2,500,000  by June
30, 1997,  but there can be no assurance  that the Company will be able to raise
this  or  any  other  funding  and  continue  its  operations.  See  "Cautionary
Statements - Future Capital Needs."
<PAGE>

     The Company  anticipates  that the minimum of $1,000,000 will be sufficient
to allow it to complete  development of its system to start its FDA work and the
maximum of $2,500,000 will allow it to submit its system to the FDA and continue
its market introduction  schedule.  Funds of at least $15 million will be needed
to significantly expand sales and marketing activity,  including  establishing a
sales force once  development  of the  Company's  product is  completed,  and to
establish manufacturing capabilities,  to fund inventory and accounts receivable
and repay the Notes.  Quantech is currently reviewing multiple avenues of future
funding including a secondary offering of securities,  private sale of equity or
debt with equity features or arrangements with strategic  partners.  The Company
does  not have  any  commitments  for any such  financing  and  there  can be no
assurance  that the Company will obtain  additional  capital when needed or that
additional  capital  will not have a dilutive  effect on  current  shareholders.
Although the Company has a limited  lending  arrangement  with its bank, it does
not anticipate receiving significant funding from commercial lenders.

     Quantech incurred capital  expenditures of $91,949 in the nine month period
ended March 31, 1997. The Company anticipates  significant capital  expenditures
in fiscal 1997 for laboratory and production  equipment and office  expansion as
the  Company  nears  product  introduction.   The  timing  and  amount  of  such
expenditures   will  be  governed  by  the  Company's   development  and  market
introduction  schedules  which are  subject to change due to a number of factors
including development delays, FDA approval and availability of future financing.
In addition to capital  expenditures,  the Company has a final  minimum  royalty
payment of $150,000 due to Ares-Serono on December 31, 1997.

     The Company currently has outstanding 47,675,759 shares of Common Stock. It
also has options and warrants  outstanding to purchase an additional  15,873,603
shares.

Issued But Not Yet Adopted Accounting Standard

     In October 1995,  the Financial  Accounting  Standards  Board (FASB) issued
Statement No. 123, "Accounting for Stock-Based Compensation",  which establishes
financial   accounting  and  reporting   standards  for   stock-based   employee
compensation  plans.  The Company will be required to adopt Statement No. 123 in
fiscal 1997. The Company does not intend to adopt Statement No. 123 in measuring
expense;  however, it will present the pro forma disclosures and those pro forma
amounts  will  likely be less than the  amounts  shown in future  statements  of
income.

Cautionary Statements

     As provided for under the Private  Securities  Litigation  Act of 1995, the
Company wishes to caution investors that the following important factors,  among
others,  in some  cases  have  affected,  and in the future  could  affect,  the
Company's  actual  results  of  operations  and  cause  such  results  to differ
materially  from those  anticipated in  forward-looking  statements made in this
document and elsewhere by or on behalf of the Company:
<PAGE>

No History of Operations; Development Stage Company; Going Concern Uncertainty

     To date,  the Company does not have a product ready to be brought to market
and its proposed  operations  are subject to all of the risks  inherent in a new
business  enterprise,  including  completion of commercial  development  and FDA
approval  of  its  instrument   within  reasonable  time  frames  and  financial
constraints,  lack of marketing  experience and lack of production history.  The
likelihood  of the success of the  Company  must be  considered  in light of the
expenses,  difficulties and delays frequently encountered in connection with the
start-up of new businesses,  and specifically those historically  encountered by
Quantech,  the development of a new product and the  competitive  environment in
which the Company will operate.  The report of the  independent  auditors on the
Company's  financial  statements for the period ended June 30, 1996, includes an
explanatory  paragraph  relating to the uncertainty of the Company's  ability to
continue as a going  concern.  The Company is a development  stage company which
has  suffered  losses  from  operations,   requires  additional  financing,  and
ultimately needs to successfully  attain  profitable  operations.  These factors
raise  substantial  doubt  about the  Company's  ability to  continue as a going
concern.  There can be no  assurance  that the Company will be able to develop a
commercially viable product or marketing system or attain profitable operations.

Future Capital Needs

     The Company does not have sufficient funds to continue  operations past May
31,  1997 or  commence  commercial  production  and  sales  of its  system.  The
Company's  ability to continue  operations and begin  commercial  production and
sales of its system will depend upon the  continued  availability  of investment
capital,  funding  made by strategic  partner(s)  or  licensing  revenues  until
revenues from sale of Quantech's instruments and associated test disposables are
sufficient  to  maintain  operations.  Additional  funds  may have to be  raised
through equity or debt financing  which could dilute  current  shareholders.  If
funding  is not  available  when  needed,  the  Company  may be  forced to cease
operations and abandon its business.  In such event,  Company shareholders could
lose their entire investment.

Other Factors

     As described in the Company's  Form 10-KSB for the year ended June 30, 1996
under  Cautionary  Statements and Prospectus dated September 12, 1996 under Risk
Factors,  there are  additional  factors  concerning  the Company that should be
considered  including:  uncertainty of market  acceptance of Quantech's  product
once  introduced,  inability or delay in , effects of  government  regulation on
Quantech's product and its sale, ability to manufacture its product, exposure to
the risk of product liability and market for the Company's shares.


<PAGE>


                                     PART II
                                OTHER INFORMATION


Item 1. Legal Proceedings
        Not Applicable

Item 2. Changes in Securities
        Not Applicable

Item 3. Defaults upon Senior Securities
        Not Applicable

Item 4. Submission of Matters to a Vote of Security Holders
        Not Applicable

Item 5. Other Materially Important Events
        Not Applicable

Item 6. Exhibits and Reports on 8-K
        a. Exhibits -
          27.  Financial Data Schedule (filed in electronic format only)
        b. Reports on 8-K - None

<PAGE>


                                   Signatures

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.


                                      QUANTECH LTD

                                      /s/ R.H. Joseph Shaw
                                          R.H. Joseph Shaw
                                          President and Chief Executive Officer

                                      /s/ Gregory G. Freitag
                                          Gregory G. Freitag
                                          Chief Financial Officer

Date:  May 13, 1997


<PAGE>



                                  EXHIBIT INDEX
                                  QUANTECH LTD.
                          FORM 10-QSB for Quarter Ended
                                 March 31, 1997


Exhibit Number                                  Description
-------------------              ---------------------------------------------
27.                              Financial Data Schedule (filed in electronic 
                                 format only)